SÜSS MicroTec SE, a manufacturer of system and process solutions for the semiconductor industry and related markets, published its quarterly report for the first nine months of the 2023 fiscal year.
The MicroOptics division, which has not been considered a substantial part of the core business since the beginning of 2023, met the criteria for treatment as a discontinued operation in accordance with IFRS 5 as of September 30, 2023. SUSS MicroTec signed an agreement for the sale of its subsidiary SUSS MicroOptics SA to Focuslight Technologies on November 8, 2023. The transaction is expected to be completed in the first quarter of 2024.The following description of business development in the third quarter of 2023 and the first nine months of the current fiscal year relates to continuing operations, i.e. excluding the MicroOptics division.
In the third quarter of 2023, SUSS MicroTec generated order intake of EUR 103.0 million with continuing operations. That means order momentum increased further from EUR 83.3 million in the second quarter of 2023. The Advanced Backend Solutions division accounted for the bulk of order intake of EUR 93.7 million. Particularly noteworthy was the positive development of bonders, with orders totaling EUR 62.1 million. SUSS MicroTec had never before received such a large volume of bonder orders in a single quarter. Temporary bonders contributed more than EUR 50 million to this development. “We are benefiting from the rapid increase in capacity for microchips used in artificial intelligence applications. We supply both manufacturers of high-performance memory chips and a foundry for the packaging process of AI chips,” says Burkhardt Frick, new CEO of SUSS MicroTec since September 11, 2023. “We are currently experiencing an extended boom in demand and have already received additional orders in the mid-double-digit million euro range for temporary bonders in October.”
Order entry totaled EUR 281.2 million in the first nine months of 2023. The order backlog for continuing operations rose to EUR 414.7 million as of September 30, 2023, and remains the basis for SUSS MicroTec’s further targeted growth. Due to the high order backlog and high capacity utilization, most new orders received in the 2023 fiscal year cannot be shipped and recognized in sales until the 2024 fiscal year.
In the first nine months of 2023, sales from continuing operations grew by 21.8% to EUR 202.3 million (previous year: EUR 166.1 million) thanks to strong growth in Photomask Solutions (+61.3%) and in bonders (+56.2%). However, growth of 12.9% to a sales volume of EUR 70.0 million was lower in the third quarter of 2023 than in the first half of the year. This was mainly due to delays in shipments to China since August 2023. German customs and export control authorities have significantly intensified the documentation and verification requirements for deliveries to China without prior notice, even though the legal basis for shipments of SUSS MicroTec equipment to China has not fundamentally changed in recent months. As of September 30, 2023, finished goods worth a total of EUR 23.5 million, mainly equipment from the Advanced Backend Solutions division, had not been shipped and was therefore not recognized in sales. CEO Burkhardt Frick: “We are asking politicians and regulators for a constructive solution and hope that handling of our shipment requests will be accelerated in short term – also serving the interest of our customers whose patience is severely put to a test.”
In the first three quarters of the 2023 fiscal year, continuing operations had a gross profit margin of 33.5% (previous year: 36.2%). In the third quarter of 2023, the gross profit margin of 29.4% (previous year: 35.3%) did not meet the company’s own expectations. This was due to lower-than-expected sales volume, which was impacted by shipment delays, and an unfavorable product mix. In the Photomask Solutions division, increased efforts to qualify external outsourcing partners resulted in start-up expenses. EBIT from continuing operations nevertheless increased by EUR 4.0 million or 45.5% to EUR 12.8 million in the first nine months of 2023 (previous year: EUR 8.8 million) due to sales growth, a slightly lower increase in selling, administrative and development costs and a positive effect from foreign currency valuation. Therefore, the EBIT margin amounted to 6.3% (previous year: 5.3%). Earnings after taxes of continuing operations increased to EUR 9.8 million (previous year: EUR 5.1 million).
Demand for SUSS MicroTec’s products and solutions remains strong. The Photomask Solutions division in particular contributed to new business in the first half of the year, while demand for bonders was strong in the third quarter. “We have basically already secured a high utilization of our production capacity in 2024. As described earlier, delays in shipments to China present the greatest short-term uncertainty for our sales development. It is impossible to predict how many tools can be delivered to China and recognized in sales by the end of 2023,” says Dr. Cornelia Ballwießer, CFO of SUSS MicroTec. For this reason, the sales forecast was adjusted to an extended range of EUR 300 to 340 million in an ad-hoc release on October 25, 2023. Since the MicroOptics division is now treated as a discontinued operation, the sales forecast on the basis of continuing operations is between EUR 280 million and EUR 320 million. The gross profit margin was adjusted to a range of 32 to 34% and the EBIT margin to 4 to 8% on October 25, 2023. On the basis of continuing operations, i.e. excluding the MicroOptics division, we expect a gross profit margin of 34 to 36% and an EBIT margin in a range of 7 to 11% for full year 2023.